© 2005 by Nelson, a division of Thomson Canada Limited. 1 Business and Community Stakeholders Search the Web The Foundation Center is a clearinghouse that publishes the “The National Directory of Corporate Giving”:

© 2005 by Nelson, a division of Thomson Canada Limited. 2 Chapter Fourteen Objectives Discuss the reasons for community involvement, various types of community projects, and management of community stakeholders Explain the pros and cons of corporate philanthropy Differentiate between strategic philanthropy, cause- related marketing and cause branding Characterize the nature of, magnitude of, and reasons for business and plant closings Address steps that a business might take before a decision to close is made Identify strategies that a business might employ after a decision to close has been made

© 2005 by Nelson, a division of Thomson Canada Limited. 3 Chapter Fourteen Outline Community Involvement Corporate Philanthropy or Business Giving Business and Plant Closings Summary

© 2005 by Nelson, a division of Thomson Canada Limited. 4 Introduction to Chapter 14 Positive and negative effects of the business stakeholder –Community involvement –Corporate philanthropy –Plant closings

© 2005 by Nelson, a division of Thomson Canada Limited. 5 Reasons for Community Involvement 1.Business people are efficient problem solvers. 2.Employees gain satisfaction and improved morale. 3.A positive image facilitates hiring. 4.Business gains prestige and community acceptance. 5.Social responsibility over government regulation. 6.A company benefits from helping institutions essential to the continuation of business.

© 2005 by Nelson, a division of Thomson Canada Limited. 6 Community Involvement Recognition through articles, awards, and commendations Publicity about volunteer opportunities Executives who have board memberships Company- sponsored projects Ongoing endorsement of programs by CEOs Encourage Employee Volunteerism

© 2005 by Nelson, a division of Thomson Canada Limited. 7 Community Involvement Company Benefits From Employee Volunteerism Indirect community benefits Employee benefits Bottom-line benefits

© 2005 by Nelson, a division of Thomson Canada Limited. 8 Community Involvement Resourced-Based Giving Assess resources Assess competencies Determine where resources and competencies will achieve the most good

© 2005 by Nelson, a division of Thomson Canada Limited. 9 Managing Community Involvement Business Stake in the Community –Self-interest and preservation –Direct or indirect benefits Developing a Community Action Program –Knowing the community –Knowing the company’s resources –Selecting projects –Monitoring projects

© 2005 by Nelson, a division of Thomson Canada Limited. 10 Managing Community Involvement Demographics Environmental and land use Infrastructure and physical services Leadership Leisure Local economy Local education Local government Local health and human services Community Needs Assessment

© 2005 by Nelson, a division of Thomson Canada Limited. 11 Managing Community Involvement Knowing the Company’s Resources Mix and range of resources Personnel Money Meeting space Equipment Supplies Time

© 2005 by Nelson, a division of Thomson Canada Limited. 12 Managing Community Involvement Selecting Projects Plan and organize projects Meet cost effectives business standards Capitalize on corporate talents and resources Involve employees in projects Select communities familiar to the corporation Select projects with high probability of success Use corporate policy to support ongoing programs Select projects that allow people help themselves

© 2005 by Nelson, a division of Thomson Canada Limited. 13 Managing Community Involvement Monitoring Projects Review execution strategy for congruence with plan and schedule Obtain feedback from participants

© 2005 by Nelson, a division of Thomson Canada Limited. 14 Managing Community Involvement Knowing the community 1. Knowing the community—The corporation should get involved in the communities it knows. Knowing the company’s resources 2. Knowing the company’s resources— Community involvement must be cost- effective. Selecting projects 3. Selecting projects— Programs should affect and interest those employees involved. Monitoring projects 4. Monitoring projects— Management must run community involvement like other parts of the business. Monitoring projects 4. Monitoring projects— Management must run community involvement like other parts of the business. Developing Community Action Programs

© 2005 by Nelson, a division of Thomson Canada Limited. 15 Community Involvement of Foreign-Based Firms 81% had community involvement projects 71% reported community expectations were important parts of their business plans 50% were satisfied with their community involvement programs

© 2005 by Nelson, a division of Thomson Canada Limited. 16 Community Involvement of Foreign-Based Firms Motivations Moral obligations Community expectations Image strengthened Self-interest

© 2005 by Nelson, a division of Thomson Canada Limited. 17 Business Giving: Why Do Companies Give? Nondonors: No evidence of charitable giving... “ “What’s in it for Us” “We Are a Good Citizen” “We Care” Competitiveness, even for companies with lofty goals, competitiveness still determines that corporate giving be strategic—aligned with profitability objectives.

© 2005 by Nelson, a division of Thomson Canada Limited. 18 Business Giving: Who To Give To? Education Health and human services Civic and community activities Culture and the arts Other organizations

© 2005 by Nelson, a division of Thomson Canada Limited. 19 Business Giving: Managing Corporate Philanthropy Public purpose partnerships Global philanthropy

© 2005 by Nelson, a division of Thomson Canada Limited. 20 Business Giving: Managing Corporate Philanthropy Public Purpose Partnerships A for-profit business enters into a cooperative agreement with a nonprofit for their mutual advantage –Reconciles financial and social goals

© 2005 by Nelson, a division of Thomson Canada Limited. 21 Business Giving: Managing Corporate Philanthropy Strategic Philanthropy When giving fits the firm’s overall mission, goals or objectives by: –Contributing to a firm’s economic success – Aligning with the firm’s business endeavors

© 2005 by Nelson, a division of Thomson Canada Limited. 22 Business Giving: Managing Corporate Philanthropy Cause-Related Marketing Direct link between product or service and charity Purposes of cause-related marketing –Global marketing –Image building –Marketing to interest groups Cause branding

© 2005 by Nelson, a division of Thomson Canada Limited. 23 Business Giving: Global Philanthropy - Advantages An improved corporate image A boost in market penetration Improved personal relations Improved government relations

© 2005 by Nelson, a division of Thomson Canada Limited. 24 Business and Plant Closings What should business do? –Before deciding to close: Propose new ownership Explore employee ownership –After deciding to close: Conduct community impact analysis Provide advance notice Provide transfer, relocation and outplacement Act to phase out business gradually Assist community with replacement industry

© 2005 by Nelson, a division of Thomson Canada Limited. 25 Business and Plant Closings Employee readiness for ownership Union attitudes Skills among employees Products and markets Technology Proposed organizational structure Potential funding sources Employee Ownership: Factors

© 2005 by Nelson, a division of Thomson Canada Limited. 26 Business and Plant Closings What groups will be affected? How will they be affected? What is the timing of initial and later effects? What is magnitude of the effect? What is the duration of the impact? To what extent will the impact be diffused in the community? Community Impact

© 2005 by Nelson, a division of Thomson Canada Limited. 27 Business and Plant Closings Advance Notice Worker Adjustment and Retraining Notification Act More notice than the law requires Attracting Replacement Industry Cooperation Assistance

© 2005 by Nelson, a division of Thomson Canada Limited. 28 Business and Plant Closings Gradual Phase-Outs Buys time for employees Buys time for communities Benefits Transfer Relocation Outplacement

© 2005 by Nelson, a division of Thomson Canada Limited. 29 Business and Plant Closings Factors in Plant Closing Assistance Size and impact of closing Extent of corporate commitment Length of time firm located in community The time the firm employed employees Resources available to provide assistance Firm’s sense of social responsibility

© 2005 by Nelson, a division of Thomson Canada Limited. 30 Business and Plant Closings Community Lawsuits General Motors case

© 2005 by Nelson, a division of Thomson Canada Limited. 31 Cause branding Cause-related marketing Community action program Community involvement Employee owned Philanthropy Resource-based giving Strategic philanthropy Third sector Selected Key Terms